Montreal still loves baseball, but odds stacked against a new major league franchise

OTTAWA, April 1, 2014 /CNW/ - Montréal has the market for a Major League Baseball (MLB) team to succeed, but a new version of the Montréal Expos is unlikely to take to the field any time soon.

Despite last weekend's impressive show of fan support for professional baseball in two pre-season games featuring the Toronto Blue Jays and the New York Mets, that is the conclusion of The Conference Board of Canada's analysis of the economics of baseball in Montréal, published in a new book, Power Play: The Business Economics of Pro Sports.

The economic structure of Major League Baseball, the current lack of a suitable downtown playing facility, and the need for owners with deep pockets are obstacles to the return of a franchise to Montréal.

"Montréal today has the necessary market conditions to be home to an MLB franchise, but the competitive conditions in baseball make it non-appealing to most potential investors," said Mario Lefebvre, co-author of Power Play. "Unless an owner with extremely deep pockets and a readiness to lose money occasionally shows up, we fear that baseball won't be returning to Canada's second-largest city any time soon."

HIGHLIGHTS

•     There is one major economic factor working against a return to Montréal—the lack of a level playing field among franchises.
•     A new stadium would be needed to make baseball work again in Montréal, making the initial investment greater than $1-billion.

The Canadian dollar is stronger than it was a decade ago. However, it would be difficult to foresee an individual or corporation willing to bring a team back to Montréal, knowing that the club could struggle to be competitive in a business that has a massive gap between the player payrolls of the richest franchises and most other clubs.

Baseball does not have a hard player salary cap, which creates a financial playing field that is not levelled among the MLB clubs.  Although some teams with lower overall player salaries have made the baseball playoffs in recent years, many struggle to have ongoing on-field success against teams in large markets with much higher revenues -- and payrolls.

Based on 2013 figures, a new franchise in Montréal could expect to have a player payroll of about $65 million, putting it in the bottom third of the payroll rankings. As a result, the franchise would have trouble consistently attracting and retaining top players.

In addition, a new stadium would be needed to make baseball succeed in the long term in Montréal. Although there are no firm stadium plans at present, the Conference Board recently applied its economic analysis to assess the impact of a new baseball stadium in Montréal for the Montréal Homerun Project.

That study clearly shows that the construction of a new downtown stadium would generate both a large number of current and future jobs, and significant new revenues for the Quebec government.

Power Play: The Business Economics of Pro Sports is authored by economists (and passionate sports fans) Glen Hodgson and Mario Lefebvre. It examines the economic conditions of the communities that host professional sports franchises, looks at the operating conditions for pro sports leagues, discusses franchise ownership and management, and addresses the politically hot topic of who should pay for new pro sports facilities. The book looks at why some pro sports franchises succeed, financially and competitively, while others fail, and concludes with a "fearless forecast" of what the Canadian pro sports scene could look like in 2035.

Power Play: The Business Economics of Pro Sports is available in printed and e-book formats. For more information, visit http://www.conferenceboard.ca/powerplay.

The authors will be present at the Montreal Real Estate Forum, Tuesday, April 1, at the Fairmont Queen Elizabeth.

 

SOURCE: Conference Board of Canada

For further information:

Brent Dowdall, Media Relations, Tel.: [phone] ext. 448
E-mail: [e-mail]